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tv   Nightly Business Report  PBS  September 18, 2010 1:00am-1:30am EDT

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>> suzanne: gold hits another new high, as it closes in on an incredible $1,300 an ounce. >> it's possible that we're going to see some profit-taking over the couple of months to come, but i think as we go into the elections we'll still see the pot boiling on gold right now. >> tom: the rally in gold is helping other metals sparkle. silver is now trading at a 30- year high. you're watching "nightly business report" for friday, september 17. this is "nightly business report" with susie gharib and tom hudson. "nightly business report" is made possible by:
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this program is made possible by contributions to your pbs station from viewers like you. captioning sponsored by wpbt >> tom: good evening, and thanks for joining us. susie gharib is off tonight. i'm joined by my colleague suzanne pratt. gold prices have never been this high, suzanne, topping $1,277 an ounce in today's trading.
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>> suzanne: tom, gold's not the only metal shining on wall street. silver is at a 30-year high, closing at $20.82 an ounce. >> tom: been quite some rally, but the high prices metals are getting aren't scaring off buyers. as scott gurvey reports, the big rally in metals is expected to continue. >> reporter: five records in six weeks. it seems all that glitters on the futures exchanges are contracts in gold. analysts at goldman sachs, the royal bank of scotland and deutsche bank all published research notes making the case for the yellow metal today. analyst jim steel at h.s.b.c. says there are many reasons to expect the trend to continue. >> we still have a lot of financial market fragility, a lot of uncertainty about the economy going forward. we've had the reintroduction of quantitative easing, and we've also had a lot of volatility in the currency markets. when you combine all those things, i think it's really tailor-made to continue the gold rally.
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>> reporter: several of the reports tied the gold rally to the federal reserve, which meets on tuesday and may again pledge to inject more cash into the economy. that would raise fears the dollar will lose value against commodity assets like gold. the gold rally has spilled over into other metals, especially silver, now trading at a 30-year high. mike dudas, of jefferies, says the forecast for silver is also a function of economic growth. >> silver is a bit more volatile than gold. it's more industrial, as opposed to gold, which is more like a currency. so, silver is used around the world. so, as economic growth improves in places like india, china and the developing nations, that typically can be helpful for silver demand. >> reporter: the rally in metals has been so strong in recent days, some profit taking is expected. but analysts still see the outlook as positive over the months ahead. >> now that we've broken over these new highs, we have long positions on the comex, we certainly have big builds up in the e.t.f.'s, it's possible that we're going to see some profit- taking over the couple of months
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to come, but i think as we go into the elections we'll still see the pot boiling on gold right now. >> reporter: even at current levels, gold has a long way to go to reach its inflation- adjusted all-time high. that would be between $2,200 and $2,300 an ounce. scott gurvey, "nightly business report," new york. >> suzanne: setting up the new consumer financial protection bureau is a job that can't wait. that's what president obama said today, as he tapped elizabeth warren to help create the agency. warren is a harvard law professor and longtime consumer advocate. warren was viewed as a natural choice to run the agency, but the president instead appointed her as a special adviser. that means she will avoid a lengthy and possibly contentious confirmation process. for years, the financial industry had a powerful lobby. now, the president says consumers will have one too. >> from now on, consumers will also have a powerful watchdog-- a tough, independent watchdog whose job it is to stand up for
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their financial interests, for their families' future. and i am proud that we got this done, and i'm equally proud that elizabeth warren will be helping to make her original vision a reality. >> suzanne: president obama says warren will play an important role in choosing the bureau's director. but, the white house declined to say whether she will be a candidate for the job. >> tom: here are the stories in tonight's n.b.r. newswheel: stocks wrap the week on an up note, the dow added 13 points, the nasdaq rose 12 and the s&p 500 was up nearly a point. quadruple witching put a spell on trading volume, it doubled from yesterday's levels on the n.y.s.e. and surged to its highest level all week on the nasdaq. consumer prices held steady in august, rising just 0.3%. excluding food and energy, prices were flat, showing no inflation.
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so much for making up for savings lost during the recession. americans' net worth fell nearly 3% during the second quarter, stalling their personal financial recovery. the federal reserve gets that number by weighing assets like homes and stocks versus debts like mortgages and credit cards. and, alabama's attorney general says b.p. is "playing games" in denying the state's claim for $148 million in lost government revenues. b.p. says it rejected the claim because of ongoing litigation with the state. >> tom: still ahead, we meet the people behind household brands like tarn-x and c.l.r. as we pick up our focus on family business in tonight's "all in the family." >> suzanne: some of the biggest names in the high tech industry have landed in the sights of the justice department. at issue, whether the companies got together to hold down salaries by agreeing not to hire away each others' employees. stephanie dhue reports. >> reporter: companies like
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google, apple, and intel often collaborate on new technology. now the justice department is looking at a different kind of collaboration, where these high tech companies pledge not to poach each others' workers. analyst scott cleland says those agreements limit competition and employee choice. >> when many of the best companies that somebody would want to work at, especially a high-value employee, it really limits your income and your choices. if that group gets together and colludes and says "we're not going to poach each other." >> reporter: and it's not just workers that see a downside. tech consultant rob enderle says the practice may hurt the companies involved. >> basically, they are assuring a steady bottom line and trading off the possibility for rapid growth by doing this, they are blocking each other from getting the resources they need to advance rapidly. >> reporter: the government has looked into other industries'
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hiring practices, including hospitals that colluded to cap nurses' pay. in the high tech case, the justice department has questioned more than a dozen firms. it's investigating a range of practices, some involving agreements not allowing recruiters to call competitors' employees. antitrust attorney robert skitol says such a wide-ranging investigation is likely to yield mixed results. >> it would not be surprising, in a multiparty investigation of this sort, to see at the end of the investigation that some are negotiating settlements and consent decrees while others are in essence throwing down the gauntlet and taking the department on. >> reporter: some companies that have been questioned, including yahoo and genentech, say the they aren't targets of the investigation. the justice department had no comment.
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stephanie dhue, "nightly business report," washington. >> tom: september still not living up to its historic trend, which is usually the worst month of the year. we continue to see higher stock prices. let's get you updated in tonight's "market focus." today's gains were modest, but the three major indices are up three weeks in a row. the dow added 1.4%, starting with the big rally on monday, and gains in four out of the five sessions. the nasdaq is 3.25% higher than a week ago, gaining all five sessions. the s&p 500 was up three out of
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five days. it gained 1.5% on the week. today's markets were led by the economically sensitive industrial stocks, and flight to safety buying in telecom, due to the sector's dividends. last night's winner and loser were the big movers today, we're talking about oracle and biotech firm arena. the loser? arena pharmaceuticals saw huge volume. today's 47% stock drop takes it down to an all-time low. an f.d.a. advisory panel rejected its obesity medicine. oracle stock saw five times its normal volume, jumping 8%. that takes it to a new post- bubble high-- the bubble being the tech stock bubble from 2001. its earnings beat the street. also in tech, a couple of memory chip makers got hurt over worries about falling chip prices. micron fell 5%, with analysts cutting their estimates, blaming weak demand for personal computers and consumer electronics. sandisk dropped 3% over pricing worries. finally in tech, check out
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netsuite-- rallying to a new 52- week high. this business software firm will add 150 workers to meet demand for cloud computing services. education stocks have staged big rallies since the month began, including a big pop in student loan corporation today. the stock jumped more than 41% on more than 15 times its usual volume. shares have been in a downward spiral since january, but with today's gain, the stock is up more than 60% this month. the company is selling itself in a three-way deal. shareholders will get $30 per share. discover takes the student loan business for $600 million. s.l.m.-- sallie mae-- takes the portfolio of federal student loans for $28 billion and citi takes $9 billion. citi already owns 80% of the company. this deal comes as student loan defaults have risen, and the federal government is looking to crack down on the lending practices of for-profit education companies. the government wants to limit a for-profit school's ability to secure federally backed student loans if too many of their students are graduating, with
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big debts, into lower paying careers. since the end of august, several of these stocks have out- performed the market as investors work to figure out how the rules will impact these schools. corinthian colleges is up more than 30% this month. universal technical institute runs auto repair schools. it's up 23%. american public focuses on the military. its shares have gained 19% in september. earlier, scott detailed the big rallies in silver and gold. they weren't the only commodities jumping. check out corn. corn grew to over $5 a bushel today. prices are up more than 30% since the fourth of july. the u.s. crop is expected to shrink this fall. even as global demand increases. we saw our first i.p.o. since labor day this week. it hit the market today, and ended with a bang. soufun holdings priced at $42.50 per share and ended its first day at $72.70, up 71%. this is a chinese real estate website. it lists properties, but also second best initial offering of
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the year. and that's tonight's "market focus." >> suzanne: federal regulators want to bring down the curtain on window dressing, a long- standing practice financial firms have used to disguise their debt. the securities and exchange commission reached a preliminary agreement today requiring banks to disclose more information about their assets and loans. the move comes after widespread criticism of the lehman brothers accounting practice called "repo 105." it allowed the firm to move debt off its balance sheet and mark it as sales. under the proposed rule, banks would be required to detail their short-term borrowings
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quarterly and annually. >> tom: here's what we're watching for next week. our friday "market monitor" guest is mark leibovit, chief market strategist at also next week, we'll see august housing starts and existing homes sales. monday, the architect of the bush tax cuts says more money won't fix the economy. so what will? we'll ask glenn hubbard, dean of columbia university's graduate school of business. >> suzanne: the merger of continental and united airlines was cleared for takeoff today by shareholders of both companies. it was the last major hurdle for the $3 billion deal to create the world's largest airline. the merged company will be known as united airlines and run by continental c.e.o. jeff smisek. he hinted at possible layoffs today, saying there are overlapping jobs. but, he didn't give any details. the deal is expected to close by october first. >> tom: the number of failed u.s. banks now stands at 120 this year, after regulators took
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over five banks this afternoon. euu@@@
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stocks have been creeping higher this month, and tonight's "market monitor" says get ready for a new rally. she's elaine garzarelli, president of garzarelli capital. she joins us from philadelphia. >> nice to be here, thank you. >> tom: in february, you were saying the winter swoon was over, and we did see prices climb through april, and since then we've seen some volatility. what makes you think higher stock prices are coming? >> well, we've been in a trading range for five or six months. usually after the initial surge, the market went up 70% for the s&p 500 after a recession, the usual case is that the stock market goes into a trading range for six to 12 months. so that is normal. and every time that happens, there is talk about double dip. and i don't see a double dip, therefore i think we're going to come out of this trading range, which
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has been 1050 to 1150 for five or six months. >> tom: okay. so how high and how fast do you think this rally could come? >> well, my indicators have gone up from 67% to 82%. which is quite bullish. 100% is the maximum, so 82% is fairly good. 30% would be a new bear market. i have earnings for 2011 at 86. the consensus now is at 95. so i'm way below the consensus, and with the p.e. normal of about 15, that gets us to 1300 on the s&p 500. what's that, 15% -- >> tom: a very bullish move, yeah. >> that is only based on '11, not 2012 earnings. >> tom: you were here in february, and you were looking for dividend plays, including high-yield junk bonds, which were up 2%. do you still like this area? >> absolutely.
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i love junk bonds. >> tom: all right. and you also liked a mortgage company, which is down 2.5%. that does not account for any dividends paid out, and the industrial exchange traded fund, here is your winner, up almost 6.5%, better than two or three times what the market has performed, and you still would put new money into xli. why? >> the analysts are up 5 % with the dividends. xli, because the growth is going to be in four areas, customer durables, equipment and customer spending, and residential construction. there will be still be a very large of industrials because of exports and business replacement equipment. so i still like x. l.i.. i think we can do two times better than the gain in the s&p 500. >> tom: you mentioned consumers and
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discretionary stocks, there is an e.t.f., xly, and it has been in the low 30s now. what is fueling the consumer even as it pays off its debts? >> paying off its debts, basically replacement demand, and paying off debt gives you more income and more faith that things will get better and it is time to spend again. i don't know how many of my friends just bought new tv sets and cars. there is a strong demand for automobiles in next year and into 2012 as well for housing. mcdonald's is in there, disney, home depot, ford. >> tom: we have less than a minute left, and i want to get to the other two, including technology. we've seen merger and technology heat up. is this part of your play? >> the x. l.k., it is replacement and new equipment and productivity, and microsoft, ibm, intel, and cisco. >> tom: and x. h.b., are
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you calling a bottom in house prices? >> we've got housing starts in 1.2 million in 2012, based ob demographics. so the x. h.b. has home building stocks like lennox and ryeler. >> would you rather by the x. h.b. than a new home? >> yes. i own everything i've mentioned in my sector analysis fund. >> tom: elaine garzarelli, great to see you again. she is president of garzarelli capital. >> suzanne: you've probably heard of shamwow and oxiclean, thanks to loud t.v. commercials touting the products. but, it was the company behind tarn-x, that began the trend of boisterous ads decades ago. in tonight's "all in the family" segment, diane eastabrook introduces us to the family business of tarn-x. >> remember when cleaning silver meant hours of hard work rubbing and scrubbing until your hands
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were raw? >> reporter: tarn-x ads were a staple of 1970s television. >> introducing c.l.r. >> reporter: c.l.r.'s been a t.v. staple since the 1990s. but did you know these household names are actually made by the same company? it's a small family-owned firm called jelmar. >> it actually stands for 3 of my older cousins. judy is the "j." the "l" is laura. and the "mar" is marsha. >> reporter: alison is the third generation of guttermans to run jelmar. her grandfather manny-- a manufacturer's rep-- started the company in the late 1960s. a friend who was in advertising asked manny to help him sell a warehouse full of a cleaning product the ad man got from a bankrupt client. gutterman--along with sons stephen and aruthur-- reformulated the product and sold it as tarn-x. >> i think that we're one of those companies that somehow in the cosmos was meant to be.
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>> good morning, good morning. >> reporter: alison took over the reins of jelmar from her father, arthur, a few years ago. he's the company chairman and still comes into the office. on this day, they plan a visit to a customer. >> maybe we take the day wednesday, we drive up there and we have dinner with them, and we meet on thursday and we drive back on friday. >> reporter: gutterman thinks running jelmar is much harder for his daughter than it was for him. that's because today there are fewer retailers and they're much larger. >> you want to get an appointment somewhere now, it's difficult. you want to get an answer-- it's difficult. >> reporter: still, gutterman is convinced alison has the spunk to drive this $40 million company into the future. >> thank you. >> reporter: when she's not handing out paychecks to jelmar's 14 employees, alison is often checking out an assembly line at one of the four factories contracted to make tarn-x and c.l.r. >> if you notice from back here we have a backup labeling head.
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>> reporter: while tarn-x and c.l.r. have become iconic brands, alison says it's essential to find new ways to extend them. >> we have a chemist that works with us to develop new products. sometimes we'll go, and we'll look at products that are on the shelf and we'll see something and it'll spur an idea and we'll figure out how we can either make it better, or another twist that we can combine one surface with another surface to clean. >> reporter: it's also essential to get new customers into stores to buy tarn-x and c.l.r. alison's grandfather and father did it successfully through television. alison's using t.v. and new media. jelmar is reaching out to new customers through facebook and twitter. you can even find spoofs of its products on youtube. >> people want to have a more
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one-on-one relationship with the companies that they are buying their products from. and, they want to tell the companies directly, "i like it, i don't like it, i don't like the color, i don't like the fragrance." and we had to find a way to get to those consumers >> reporter: bigger companies have tried to buy jelmar, but alison insists she'll keep the company and its brands in the gutterman family. >> when people hear that c.l.r. is a family business, they can't believe it. it's kind of like a cult. >> reporter: diane eastabrook, "nightly business report," skokie, illinois. >> suzanne: that's "nightly business report" for friday, september 17. i'm suzanne pratt. good night everyone, and have a good weekend. you too, tom! >> tom: good night suzanne. i'm tom hudson. good night everyone. we hope to see all of you again monday night. "nightly business report" is made possible by:
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this program was made possible by contributions to your pbs station from viewers like you. captioning sponsored by wpbt captioned by media access group at wgbh
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>> more information about investing is available in "nightly business report's" videos. to order this dvd, call 1-800- play-pbs or visit online at >> be more. pbs.
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